In a February 27, 2018 Federal Court of Appeal case (H.M.Q. vs. Cheema, A-447-16), the taxpayer had claimed a new housing rebate. The property on which the rebate was claimed was owned 99% by the taxpayer (C) who occupied the house with his family and 1% by an unrelated person (A) who did not live in the house. The Tax Court had determined that A held his interest as a bare trustee for C, and his ownership did not prevent C from qualifying for the new housing rebate (Cheema vs. H.M.Q., 2015-5407(GST)I).

Taxpayer losesThe FCA held that, where a property is acquired by two or more individuals, they must each meet the requirement of acquiring the property for use as the primary place of residence of the individual or a related person (Excise Tax Act Paragraph 254(2)(b)). It was not relevant that A had no beneficial interest in the property. There is no exception for bare trustees. The Tax Court’s decision was overturned – the rebate was not available.

The Court noted that, had A been related to C, the rebate would have been available, as the legislation permits property occupied by a person related to the purchaser to qualify for the rebate. As such, the rebate would still be available on property acquired (in whole or in part) by a parent, and occupied by a child.